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As oil prices plummet in the US, consumers flock to fuel guzzling SUVs and pickups.

Oil last week sunk to a 12-year low which will affect future electric car sales.

“It probably affects us a little less because we have quite significant product differentiation,” he told CNN, warning that lower priced electric vehicles will “take a pretty big hit.”

Tesla is working on a Model 3 for mass production that would arrive with a starting price of $34,000. Musk is convinced his company’s cars will stack up better than other electric vehicles.

“Even if the economics of oil favor gasoline, I think the Model 3 still does well,” he said. “It’s more cases where there is little to no differentiation between the gasoline version of something and the electric version. If they’re about the same, and the electric version doesn’t have a compelling economic proposition, then you’ve got a real issue in the market.”